Sole Bidder Has No Vested Right to Contract Award, Rules Patna High Court in BUIDCo Drainage Tender Dispute

Patna High Court dismisses writ petition of sole bidder in BUIDCo storm water drainage tender, holding no enforceable right to contract arises absent a Letter of Acceptance.

A Division Bench of the Patna High Court, comprising Acting Chief Justice Sudhir Singh and Justice Rajesh Kumar Verma, has dismissed a writ petition filed by a joint venture that had twice emerged as the sole bidder in tender rounds floated by Bihar Urban Infrastructure Development Corporation Ltd. (BUIDCo) for construction of a storm water drainage system at Bodh Gaya. The Court held that participation in a tender process, even as the only technically and financially qualified bidder, creates no vested or enforceable right to demand award of the contract. The decision also upheld BUIDCo's Board of Directors cancelling the tender on the ground that the tender documents had omitted a mandatory five-year operation and maintenance component that formed part of the original administrative approval.

The Dispute Before the Court

The petitioner, Amit Kumar-Alok Kumar, Patna (JV), participated in two successive rounds of tendering for the Bodh Gaya storm water drainage project. In the first round, initiated by NIT No. BUIDCo/Yo-2052/21-105 dated 12 October 2023, the JV was the sole bidder. BUIDCo cancelled that tender on 12 December 2023 citing lack of competition.

A fresh NIT No. BUIDCo/Yo-2069/2021-113 was issued on 13 December 2023 on substantially the same terms. The JV again emerged as the sole bidder. The Technical Bid Evaluation Committee found it technically qualified and recommended its bid. The Tender Committee, meeting on 5 March 2024, resolved to place the matter before the Board of Directors, being the authority one level above the Tender Committee.

Before the Board could act, BUIDCo issued a tender cancellation notice dated 24 May 2024 citing “unavoidable circumstances”. The JV challenged that cancellation in CWJC No. 10276 of 2024. By order dated 11 December 2024, this Court recorded BUIDCo's submission that the matter would be placed before the Board for consideration, directed the Board to pass a speaking order, and noted that the petitioner would be at liberty to challenge that decision if so advised.

Pursuant to that direction, the Board, in its 79th meeting held on 25 March 2025, considered the entire tender history. It found that the administrative approval granted by the State Government had specifically earmarked Rs. 434.18 lakhs towards operation and maintenance of the drainage system for five years, but that amount and the corresponding obligation had not been incorporated in any of the tender documents. The Board treated this as a material defect, cancelled the tender, and directed issuance of a fresh tender incorporating the omitted requirement. That decision was communicated to the JV vide Letter No. 924 dated 26 March 2025, which formed the subject matter of the present writ petition.

The Petitioner's Grounds and the Respondents' Defence

Senior Advocate Mr. Ramakant Sharma, appearing for the JV, argued that the Board's rejection was arbitrary and contrary to Government guidelines in the Gazette Notification dated 3 October 2016. The principal submission was that once the JV was found to be the sole technically qualified bidder in the second tender and its financial bid had been recommended, the Board's only function was to accept the bid, not to manufacture new grounds for rejection.

On the operation and maintenance ground, the JV contended that the respondents themselves had issued the tender without incorporating that condition. A bidder, it was argued, cannot be penalised for an omission made by the tendering authority. The JV also submitted that the relevant works did not involve a Drainage Pumping Station, making a five-year operation and maintenance clause unnecessary, and pointed to subsequent tenders issued by BUIDCo for similar drainage works where no such clause appeared.

The JV further pressed an Article 14 argument: in other contracts involving a single bidder, the Board had approved awards even where quoted rates exceeded the estimated cost, whereas the JV's bid was 5.01% below the estimated cost. That differential treatment, it was said, disclosed discriminatory intent.

Senior Advocate Mr. Lalit Kishore, for the respondents, placed the project within the Atmanirbhar Bihar Saat Nishchay-2 programme and emphasised that the administrative approval had always included a financial provision for five years of operation and maintenance. The Board's 79th meeting had identified the omission of this integral component as a substantial defect going to the root of the tender documents. Awarding the contract on defective documents, the respondents argued, would expose BUIDCo to serious audit objections, including from the Accountant General, and would impair implementation of the project. The decision was described as a bona fide administrative measure to rectify a material defect, not an act of mala fides.

The Legal Framework the Court Applied

The Division Bench framed two issues: first, whether a sole successful bidder acquires any vested or enforceable right to demand award of a contract; and second, whether the Board's cancellation decision was so arbitrary or irrational as to warrant interference under Article 226.

On the first issue, the Court drew on three decisions of the Supreme Court. In Raunaq International Ltd. v. I.V.R. Construction Ltd., reported in (1991) 1 SCC 492, the Supreme Court held that the award of a contract is essentially a commercial decision and that even the lowest tenderer has no enforceable right to insist on award in its favour. In Michigan Rubber (India) Ltd. v. State of Karnataka, reported in (2012) 8 SCC 216, the Supreme Court held that fixing tender conditions and deciding whether to accept a bid fall within executive policy, and that judicial review lies only where the decision is shown to be arbitrary, discriminatory, mala fide, or intended to favour someone. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., reported in (2016) 16 SCC 818, the Supreme Court held that the author of the tender document is the best person to understand its requirements and that constitutional courts must exercise restraint unless the decision-making process is vitiated by arbitrariness, mala fides, or perversity.

From these authorities the Court extracted the governing principle: until the competent authority accepts a bid and communicates that acceptance, the bidder possesses only a right to fair consideration of its bid, not a right to the contract itself. No Letter of Acceptance, no work order, and no concluded agreement had been issued in the JV's favour. Issue No. I was accordingly answered against the petitioner.

Whether the Board's Decision Was Arbitrary

On the second issue, the Court examined the substance of the Board's reasons. The Board had found that the administrative approval contemplated five years of operation and maintenance and had allocated Rs. 434.18 lakhs for that purpose, but none of the tender documents contained any corresponding condition. The Board treated this omission as a material defect.

The Court held that whether operation and maintenance ought to form part of the scope of work is an essentially technical and administrative question lying within the employer's domain. It is not for the Court, in exercise of judicial review, to substitute its opinion for that of an expert body on matters relating to the formulation of tender conditions. The JV's assertion that operation and maintenance was unnecessary in the absence of a Drainage Pumping Station was characterised as a submission going to the technical merits of the project — precisely the kind of question courts must keep at arm's length.

The Court also applied the standard articulated by the Supreme Court in Silppi Constructions Contractors v. Union of India, reported in (2020) 16 SCC 489, which cautioned that courts should not use a magnifying glass while scanning tenders and should give “fair play in the joints” to government and public sector undertakings in contractual matters.

No material was placed before the Court to show that the Board's decision was actuated by mala fides, favouritism, or any intention to benefit a third party. The Court found that the decision was founded on the perceived necessity of incorporating an essential project component in the tender documents before proceeding with the award. Such a decision falls within the administrative discretion of the employer. On the Article 14 argument, the Court did not find that differential treatment in other contracts established arbitrariness on the facts of this case, given that no illegality or mala fides in the decision-making process had been demonstrated. Issue No. II was answered in favour of the respondents.

Order

The Division Bench dismissed CWJC No. 16046 of 2025 in its entirety. All pending applications in the matter were also disposed of. The Court held that the petitioner had failed to establish arbitrariness, mala fides, discrimination, or any violation of a statutory or constitutional provision in the Board's decision-making process, and that the decision did not warrant interference under Article 226 of the Constitution.